From our private database of 35,600+ case briefs...
Cookies Food Products, Inc. v. Lakes Warehouse Distributing, Inc.
Iowa Supreme Court
430 N.W.2d 447 (1988)
Cookies Food Products, Inc. (Cookies), an Iowa close corporation and producer of barbecue sauce, was founded in 1975. Duane Herrig (defendant) was an early shareholder and also owned a car parts distributing company, Lakes Warehouse Distributing, Inc. (Lakes) (defendant). In 1977 Herrig persuaded Cookies to let Lakes take over exclusive distribution of Cookies’ sauce. Sales increased dramatically. In 1982, Herrig became the majority shareholder and replaced 4 out of 5 board members. Under Herrig’s control, Cookies took four actions which were later contested by minority shareholders (plaintiffs). First, the board extended the exclusive distribution arrangement with Lakes on the same terms previously agreed to. Second, needing additional short-term storage, the board agreed to pay Lakes the going rate to use Lakes’ storage facilities. Third, Cookies agreed to pay Herrig a per-case royalty for a taco sauce which Herrig had created and added to Cookies’ product line. The royalty was slightly larger than that paid for the barbecue sauce, but the taco sauce was more profitable for the company. Finally, the board approved a $1,000 per month consulting fee for Herrig and a two percent increase in the amount paid to Lakes under the distribution agreement. Several minority shareholders sued Herrig and Lakes on behalf of Cookies, arguing that the four actions described above constituted improper self-dealing without disclosure, and that excessive amounts were paid to Herrig and his company. Testimony at trial suggested that the services Herrig and Lakes provided might have been obtained for less from other providers. After a trial, the district court ruled that Herrig had breached no duties to Cookies or the minority shareholders, because the actions under review were fair and in fact beneficial to Cookies. The minority shareholders appealed.
Rule of Law
Holding and Reasoning (Neuman, J.)
Dissent (Schultz, J.)
What to do next…
Unlock this case brief with a free (no-commitment) trial membership of Quimbee.
You’ll be in good company: Quimbee is one of the most widely used and trusted sites for law students, serving more than 618,000 law students since 2011. Some law schools—such as Yale, Berkeley, and Northwestern—even subscribe directly to Quimbee for all their law students.Unlock this case briefRead our student testimonials
Learn more about Quimbee’s unique (and proven) approach to achieving great grades at law school.
Quimbee is a company hell-bent on one thing: helping you get an “A” in every course you take in law school, so you can graduate at the top of your class and get a high-paying law job. We’re not just a study aid for law students; we’re the study aid for law students.Learn about our approachRead more about Quimbee
Here's why 618,000 law students have relied on our case briefs:
- Written by law professors and practitioners, not other law students. 35,600 briefs, keyed to 984 casebooks. Top-notch customer support.
- The right amount of information, includes the facts, issues, rule of law, holding and reasoning, and any concurrences and dissents.
- Access in your classes, works on your mobile and tablet. Massive library of related video lessons and high quality multiple-choice questions.
- Easy to use, uniform format for every case brief. Written in plain English, not in legalese. Our briefs summarize and simplify; they don’t just repeat the court’s language.